Gold prices have dropped more than 13% since the U.S.-Israeli war with Iran erupted on February 28. Spot gold extended losses for a fourth consecutive session, and was down 2 per cent at $4,557.25 per ounce, its lowest since May 6. Bullion has lost 3.3 per cent so far this week. U.S. gold futures for June delivery lost 2.7 per cent to $4,561.30. Gold fell to a one-week low on Friday, as elevated oil prices stoked inflation fears, boosting expectations of higher interest rates and sending U.S. Treasury yields near one-year highs. Spot silver fell 6.4 per cent to $78.16 per ounce, platinum lost 2.7 per cent to $1,999.60, and palladium was down 0.7 per cent at $1,427.39.
"Gold is getting hit from all sides - rising oil has brought inflation back to the forefront, pushing yields higher and the dollar stronger, leaving the yellow metal as the unfortunate victim of the market's renewed rate-cut scepticism," said Tim Waterer, chief market analyst at KCM Trade.
Gold Rate Prediction
The dollar has gained more than 1% so far this week, making greenback-priced bullion expensive for holders of other currencies. Brent crude oil prices were up 6.6% this week, hovering above $108 a barrel, as the Iran war drags on, keeping the key Strait of Hormuz largely shut.
A series of inflation reports this week showed the risk that rising energy costs could spill over to other goods and services, dimming hopes for near-term U.S. rate cuts.
Traders have largely priced out U.S. interest rate cuts this year, with markets anticipating a 39% chance of a hike by December, according to CME Group's FedWatch tool.
While gold is seen as a hedge against inflation, high rates tend to weigh on the non-yielding asset.
On the geopolitical front, U.S. President Donald Trump departed China touting business deals that gave markets little to cheer, while Beijing warned Washington about mishandling Taiwan and said its war with Iran should never have started.
